McBride’s Brave Digital Future Riles Some At Digital Summit

David M. Ross

“Songs are not shirts,” said Digital Summit Keynote speaker Terry McBride. “They are emotions that become bookmarks in people’s lives.” McBride is CEO and one of three founders of the Nettwerk Music Group which includes Nettwerk Productions (Canada’s largest independent record label), Nettwerk One (publishing), Nettwerk Management and more. Management clients include Avril Lavigne and Barenaked Ladies.

The keynote was a blueprint on how to fulfill one man’s vision for the future of the digital music industry. Many of McBride’s ideas have already proven extremely successful within his own company which now has offices in Vancouver, New York, London, Boston, Nashville, Hamburg and Los Angeles.

McBride pointed out that the traditional industry has been based upon control of artists, their music, and careers. “Now we must give up control to the public who consumes the music,” he urged. McBride noted the industry is currently trying to change behavior through legislation and litigation, naming the RIAA as an example. “History shows that won’t work,” he said. “We must move to monetize the behavior of the consumer, not try to change it. Using the tool of fear will not change the habits of the millennium generation. What we are doing is forcing P2P activity underground and pushing kids into trading songs using Instant Messenger where we are unable to collect data.”

Emphasizing the need to adapt to a changing marketplace, McBride offered the drop in CD sales, loss of shelf space at mass merchants and the shrinkage in the number of CDs now hitting sales benchmarks like 3, 5 or 10 million units as proof that the business was moving to a digital business. Using Nettwerk artists as an example, the Canadian futurist said SoundScan data is no longer relevant because so many CDs can be sold from individual artist Web sites and in other ways that are not part of its metrics.

“We started creating street teams of kids who cared about the band. Now some of those teams have 90-100,000 members. They are the ones that instantly buy the concert seats, sell their friends on the music and buy the new CDs. It’s all about the path of least resistance. We are competing against free, but even free takes time and time is money. To compete the price must come down,” he said, offering 25¢ per track as a possible tipping point.

On the licensing front the young executive urged simplification. Nettwerk has the luxury in some cases of controlling all rights to its music (label, publishing, master) and has “collapsed” the various copyrights into one license which greatly improves the clearance process.

Other keynote highlights included a comparison of iTunes to the Tower Records of the 1980s and 90s. “Once we get rid of DRM it will expand the marketplace and Big Box retailers like Google or eBay, places where tens of millions of people already get together, will emerge as the most significant music distributors,” he predicted. In closing McBride challenged the other major labels to “realize they can’t tell kids what to do,” and move past the wall of fear. “Build brands,” he urged.

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